China’s largest developer China Evergrande Group will be liquidated – Kommersant

China’s largest developer China Evergrande Group, which has been experiencing serious financial problems since the fall of 2021, will still be liquidated. This decision was made by the Hong Kong court, citing the fact that the company, which defaulted several times, was unable to provide a clear restructuring plan, it reported Reuters. Even before the court decision was announced, shares of Evergrande and other divisions of the group collapsed by more than 20%. The Hong Kong Stock Exchange has stopped trading in them.

Hearings in the case were postponed seven times. All this time, Evergrande’s management tried to convince creditors of the need to preserve the company and withdraw the claim. Judge Linda Chan said in delivering her verdict that “it’s time for the court to say enough is enough.” Today the court will appoint liquidators of the developer.

At the end of August last year, Evergrande was close to recovery and the start of the business restructuring process. The company resumed trading of its shares after a 17-month hiatus. However, at the end of September it became known that the founder and chairman of the board of directors of the group, Xu Jiayin, was detained by the police and is under investigation. Evergrande said the investigation prevented it from issuing new debt and thereby preventing it from implementing its debt restructuring plan.

As analysts note, the liquidation process itself could take years, since the decision was made by a Hong Kong court, not China. Anne Stevenson-Young, founder of J Capital research, notes that “there’s really no streamlined legal process” for such cases. And Redmond Wong, chief China strategist at Saxo Markets, said it was “very remote” that Evergrande’s Hong Kong shareholders would receive anything from the liquidation process. “For overseas creditors, the focus will be on whether the liquidator can successfully apply for relief in the Chinese mainland courts in Shanghai, Shenzhen and Xiamen under the cooperation mechanism reinstated in 2021 and seize assets on the mainland,” the analyst was quoted as saying. The Guardian.

Evergrande Group is a real estate giant with assets worth $240 billion. The crisis surrounding the company continues since 2021, when it became known about the holding’s serious financial problems. The debts of one of China’s largest developers exceed $300 billion. In June 2022, the Hong Kong investment firm Top Shine filed a lawsuit for the forced liquidation of Evergrande, since the developer violated the terms of the agreement between the two companies by not buying back the shares of one of its divisions, Fangchebao. Other Evergrande creditors later joined the suit.

Kirill Sarkhanyants